Debit Rails: Automatic Debit Payments Power Utility Provider Cash Flow

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Streaming services are helping many families stay entertained during the pandemic, but managing the monthly payments for these offerings — as well as recurring bills for necessities like gas and water bills — can be frustrating.

Consumers may receive these bills via email or postal mail and then log into online payment portals or send paper checks to make their payments. Forgetting to do so could lead to late fees or even canceled services.

Subscriptions and utilities providers also wish to offer smoother payment options and to retain long-term customers, especially after having worked hard to draw them to their services in the first place. Automatic debit payments can help providers tackle these issues by automatically facilitating customers’ payments at each billing cycle, sparing consumers from taking action and ensuring that providers do not lose customers to involuntary churn.

This month’s Next-Gen Debit Tracker® examines the benefits of automatic debit payments for consumers and businesses and explores how sellers can create more compelling automatic payments experiences to win over customers who have yet to adopt the method.

Around the Next-Gen Debit World

Payment cards are popular in the United States, where consumers often use them to pay directly or to underpin digital wallet transactions. This means it is essential for subscription providers to include card payment options when creating streamlined checkout experiences, Trace Galloway, global vice president of subscription management solutions company Vindicia, said during a PYMNTS interview in January. He noted that accepting direct card payments can bring additional benefits to subscription providers, stating that sellers can reattempt transactions should they fail the first time. This is not always possible when customers pay using digital wallets and the cards linked to those wallets fail, for example. Galloway explained that the ability to retry charges can help sellers retain customers should payment issues occur.

Cards have become popular in other countries as well, with a December study from the European Central Bank finding that Greek customers showed a particular propensity for using cards for bill payments and recurring transactions. It revealed that cards were used to pay for 44 percent of the country’s bill payments and recurring payments, for example. Consumers across the euro area also used cards, with customers leveraging them for 17 percent of subscription service payments.

Consumers appear interested in using cards not only to make recurring payments but also to receive them, and U.S. households that receive regular aid disbursements such as unemployment benefits can accept them onto prepaid debit cards. Fraudsters have been ramping up their efforts to interfere with such aid and use stolen identities to divert these funds to themselves, however. One such scheme was discovered in January in Ohio, where residents reported that they received benefits cards for which they had not applied. These reports alerted the state’s Department of Jobs and Family Services that something was amiss.

For more on these and other stories, visit the Tracker’s News & Trends.

Why the Pandemic Has Hit the Gas on Automatic Debit Payments in the Utilities Sector

Consumers have plenty to worry about during the pandemic, and remembering to make their utilities payments each month can add even more stress. The desire for convenience and reassurances that bills will be paid on time is driving more consumers to adopt automatic debit payments, according to Jennifer Montague, senior vice president and chief customer officer at national utilities provider NiSource, the parent company of Columbia Gas and NIPSCO. In the Feature Story, Montague explained how automatic debit payments can create more compelling consumer experiences and help utilities providers improve their cash flows and collections.

To learn more about the state of automatic bill payments, check out the Tracker’s Feature Story

Deep Dive: Converting Customers Into Automatic Bill Payment Fans

Consumers and sellers can transact smoothly via automatic bill payments, but not all customers are eagerly adopting the method. Sellers must work to understand the factors that are holding these customers back and determine how best to help them transition away from manual payment processes toward digital — and, ultimately, automatic — payment methods. The Deep Dive examines where customers stand in these journeys and the factors sellers may wish to highlight if they want to persuade more consumers to sign on for these services.

To discover more about consumers’ feelings regarding automatic debit payments and how sellers can strategize to bring more users to these services, see the Tracker’s Deep Dive.

About the Tracker®

The Next-Gen Debit Tracker®, a PYMNTS and PULSE collaboration, offers an in-depth examination of debit’s changing role in the digital economy and how automatic debit payments can help subscription providers and utilities companies protect their cash flows and satisfy customers.

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